For the Federal Republic of Germany:

Dr. HEINZ KREKELER

Dr KURT HAEFNER

For Greece:

C. P. CARANICAS

For Guatemala:

13 avril 1953

21 April 1953

13 April 1953

April 23, 1953

Secretary of State

By BARBARA HARTMAN Authentication Officer Department of State Mr. LANGER. Mr. President, the Senate is asked to give its advice and consent to a new agreement which revises, renews, and extends for another 3 years the International Wheat Agreement of 1949 which expires on the 31st of this month. Article 20 of the new instrument sets July 15 as the ratification deadline.

Several Members of both Houses of Congress were privileged to participate in some way in the revision of this agreement, some in the capacity of advisers, others as members of the United States delegation. Many other Senators from the practical standpoint are familiar with the operation of the agreement.

Four years of experiment with this organization has proved it to be workable and efficient. In April and May of 1952 negotiations were instituted for its renewal and on April 13, 1953, the revised agreement was completed and subsequently signed by 4 exporting countries, namely, the United States, Australia, Canada, and France, and 45 importing countries. On June 2 the President sent the agreement to the Senate, which referred it to the Committee on Foreign Relations. Foreign Relations. A subcommittee held hearings and reported favorably to the full committee, which, in turn, on July 8, reported the agreement to the Senate with the recommendation that the Senate give its advice and consent to ratification and also recommended that the mentation. Senate pass a joint resolution of imple

The revised agreement covers an annual trade in wheat of 595 million bushels, of which the United States share is 270 million bushels. This represents approximately two-thirds of the world's international trade in wheat.

The agreement contains a number of technical details, but the main outline is clear and readily understood by the layman. Present arrangements are continued for international sales and purchases of wheat by a system of reciprocal guaranties by the participant governments. Supplies of wheat are assured to importing countries and markets for wheat are assured to exporting countries at equitable and fair prices. Each importing country agrees to purchase at a specified minimum price a specific quantity of wheat and each exporting country guarantees to sell a specific

quantity of wheat at a specified maximum price. The minimum price under the agreement is fixed at $1.55 and the maximum has been set at $2.05 a bushel. These are substantially higher than the prices in the old agreement. Member countries which have difficulty in securing guaranteed sales or purchases may seek the assistance of the Council in securing the contracted quantities under the agreement.

The agreement provides for an International Council, on which all participating countries are represented, with responsibility for keeping the records of operations under the agreement and with serving as an agency to enforce the rights of the participating countries to sell and purchase wheat under the agreement. Participating countries are allotted votes in proportion to their share of the total quantity of wheat covered by the agreement and the votes are divided into 2 blocks of 1,000 each, 1 composed of the importing countries, the other of the exporting countries. The United States is allotted 453 votes of the exporting countries.

If Senators will look at the report before them they will find on page 7 that the revised agreement differs from the old in 10 main particulars. The loading period has been extended to provide greater flexibilities; members countries are permitted to tranfer their quota from one or more crop years to another country, subject to Council approval; accession of new members may be facilitated by mutually agreed upon changes in quotas; limitations on purchases due to short crops are expanded; permission is given to the recording of sales made prior to the agreement; the escape clauses are tightened; adjustments to permit new importing countries to come in are included; new provisions dealing with voting are added; an advisory panel to assist the Council in settling disputes is provided for; and numerous adjustments are made in exporting and importing country quotas.

Just one word about the subsidies involved in the agreement. The 1949 agreement has cost the United States an estimated $565 million in subsidies for the entire 4 years of the agreement.

I desire to make it plain, Mr. President, that the $565 million in subsidy covers the entire 4-year period.

Mr. YOUNG. Mr. President, will the Senator yield?

Mr. LANGER. I yield to my distinguished colleague.

Mr. YOUNG. This morning I received some information from Dr. Wilcox, of the Library of Congress, as to how large a subsidy would be involved at present prices. I am advised that in June and July wheat prices at the Kansas City and Gulfport markets have been averaging slightly above the $2.05 maximum price called for under the International Wheat Agreement, the average varying from 5 to 10 cents above the maximum provided in the International Wheat Agreement. Therefore at the present time little loss would be in exporting wheat. Wheat purchased in some areas actually might bring a profit, because some wheat is selling for as much as 65 cents a bushel below the support level of about $2.21 per bushel.

Mr. LANGER. That is correct, except that the International Wheat Agreement provides that no country shall sell the wheat at a higher price than it paid in securing it.

Mr. YOUNG. The IWA authorities can purchase wheat through private channels, though.

Mr. LANGER. Oh, yes.

Mr. YOUNG. I am advised that from 25 to 30 percent of the wheat exported originated from Government stocks.

Mr. LANGER.

Yes.

Mr. YOUNG. So approximately 70 percent has come from private stocks. While I am on my feet, Mr. President, I wish to commend my distinguished colleague for the fine job he has done in bringing out the agreement. I believe he did the very best he could possibly do under all the circumstances.

Mr. LANGER. I thank my distinguished colleague, but I was very materially assisted by the junior Senator from North Dakota, who is himself a farmer and is thoroughly familiar with the entire problem. A few years ago he went to Geneva, I believe, and sat with the Council which was considering the subject matter. He is perhaps as familiar with the subject as any Member of the Senate.

Mr. YOUNG. I thank the Senator.

Mr. LANGER. In substantial measure this was due to the increase in United States quota from the original 168 mil

lion to the final 253 million bushels. The Department of Agriculture assures us that it anticipates a substantial reduction in the amount of subsidy under the new and revised agreement. It expects a drop from an average of 62 cents a bushel to 40 cents a bushel. I submit that the benefit to be obtained from the International Wheat Agreement far outweighs this relatively modest subsidy.

Mr. President, one subject overshadowed all others, both in the subcommit

tee and in the full committee. That was Britain's refusal to sign the new agreement. In this connection, permit me to remind you again that two-thirds of the world's international wheat trade is involved in this agreement. The United Kingdom was allotted roughly 30 percent

or 177 million bushels of the amount involved in the agreement. I have been informed that the British refusal was due to her unwillingness to pay the 5 cents a bushel over $2 that the agreement provides. In addition to this, information from the executive branch indicates that Britain is not unfavorable to the purchase of wheat from the U. S. S. R. Let me quote from a statement to the committee by the Assistant Secretary of State for Economic Affairs:

We have been assured by the British Ministry of Food that *** if they were offered the kinds of wheat they needed at attractive prices and for shipment at the times when wanted, such offers would be given favorable consideration if coming from Russia or anywhere else in the world.

The Ministry of Food has also informed us that the Soviet trade delegation was told that the Ministry hoped it would not be necessary for the Ministry to make further purchases but to leave this operation to private traders. If the private trade should fail to import sufficient supplies, then the Ministry would have to step in and for this

One of the witnesses before the committee, Mr. Stevens, vice president of General Mills, a man of great experience in the field of wheat, and closely associated with the negotiations, speaking in behalf of the millers, told the committee that it was his belief that the purpose of the United Kingdom in refusing to sign was its hope of wrecking the International Wheat Agreement and thereby bringing about competition between the United States and Canada as a result of which wheat prices would be depressed and the United Kingdom would succeed That in securing wheat at lower prices. this was not an empty hope is made clear by the fact that Australia signed the Agreement with the reservation that if her customary markets were affected by the failure of any importing country to enter the agreement, that Australia would be free to withdraw from the agreement unless quotas could be adjusted to her satisfaction.

Mr. President, it is the prerogative of any country to sign or to refuse to sign any international agreement which it may have under consideration. But I am gravely concerned about the alleged attitude of the United Kingdom, and I may say that all the members of the subcommittee were likewise very much concerned. A great many questions were asked by the distinguished Senator from Kansas [Mr. CARLSON], the distin

guished Senator from Iowa [Mr. HICKENLOOPER), and the distinguished Senator from Montana [Mr. MANSFIELD].

The United Kingdom has received billions of dollars from the United States since World War I I believe the amount is $43 billion-not in the form of loans to be repaid, but as grants and outright gifts. Under the circumstances, it seems to me that the United Kingdom might have signed the International Wheat Agreement. The additional 5 cents a

bushel would only cost the United Kingdom $8,500,000. They refused to sign the agreement.

countries and markets for wheat are assured to exporting countries at equitable and stable prices. Under the revised agreement, the United States is guaranteed an annual export market of 270 million bushels for the next 3 years at minimum prices specified in the agreement.

2. SUBCOMMITTEE ACTION AND HEARING The President transmitted the agreement to the Senate on June 2, 1953, whereupon it was referred to the Committee on Foreign Relations. On June 17 the chairman of the Foreign Relations Committee, Sen. ALEXANDER WILEY of Wisconsin, appointed a subcommittee consisting of Senators LANGER HICKENLOOPER, (chairman), KNOWLAND,

SPARKMAN, and MANSFIELD to study and report on the agreement. Public hearings were held, at which the subcommittee received the testimony of True D. Morse, Under Secretary of Agriculture; Senator FRANK CARLSON; Samuel C. Waugh, Assistant Secretary of State; D. A. FitzGerald, Deputy for Operations to the Director for Mutual Security; Gus Geissler of the National Farmers Union; and Glen Talbot, North Dakota Farmers Union. In addition the committee received a number of written statements from agricultural groups in lieu of personal appearances. On July 2 the subcommittee reported the agreement favorably to the full committee which adopted the subcommittee recommendations and its report as those of the full committee and voted 11 to 1 to report the agreement without amendment or reservation to the Senate for favorable action.

3. BACKGROUND

The International Wheat Agreement of 1949 was concluded after 18 years of negotiation, stretching back to a conference in Rome in 1931. Efforts to achieve a wheat agreement were delayed, but not abandoned, during World War II. In 1948 an International Wheat Agreement was signed, sent to the Senate by the President, and reported by the Foreign Relations Committee to the Senate Calendar. But the crowded calendar prevented Senate action prior to adjournment, and it became necessary to renegotiate the agreement, which in its new form was subsequently submitted to the 81st Congress, which gave its approval to ratification in 1949. The 1949 agreement is due to expire at the end of July 1953. Forty-six countries, by ratification and accession, ultimately adhered to the 1949 agreement; 4 were exporting countries and 42 were importing countries.

At its eighth session in London during

Mr. President, I ask unanimous consent that the report may be made a part of my remarks at this point in the RECORD.

There being no objection, the report (Ex. Rept. No. 4) was ordered to be printed in the RECORD, as follows:

The Committee on Foreign Relations, having had under consideration Executive H, 83d Congress, 1st session, the agreement revising and renewing the International Wheat Agreement, signed at Washington between April 13 and 27, 1953, reports the agreement favorably and recommends that the Senate advise and consent to its ratification.

1. MAIN PURPOSE OF THE AGREEMENT The agreement continues for another 3 years the arrangements for the international sales and purchases of wheat established by the International Wheat Agreement of 1949. By means of a system of reciprocal guaranties the participant governments aim at stabilizing the international wheat market.

Wheat Council discussed the renewal of the agreement upon its expiration in 1953. The eighth session adjourned and was resumed in Washington on February 2, 1953. By April 13 the Council succeeded in drafting an agreement revising and renewing the International Wheat Agreement of 1949. A period was provided for signature from April 13 to 27, inclusive. During this time 4 exporting countries (the United States, Australia, Canada, and France) and 41 importing countries signed. As indicated above, the President sent the agreement to the Senate for approval on June 2, 1953.

4. SUMMARY OF THE MAIN PROVISIONS The agreement consists of 23 articles divided into 5 parts. A short preamble is followed in part 1, devoted to definitions used in the agreement. Part 2 defines the rights and obligations and specifies the guaranteed purchases and guaranteed sales and rules regarding the recording of transactions against guaranteed quantities, the enforcement of rights, the basic maximum and minimum prices, the maintenance of stocks, and reporting requirements. In part 3 the procedures for the adjustment of guaranteed quantities are provided to take care of changing needs under varying circumstances.

Part 4 sets forth the organization and administration, including the composition and functions of the International Wheat Council, the Executive Committee, the Advisory Committee on Price Equivalents, and the Secretariat, and also provisions relating to the Council's finances and budget, cooperation with other intergovernmental organizations, and procedures for the settlement of disputes arising under the agreement. Part 5 contains the provisions for signature, aċcession, duration, amendments, withdrawal, and territorial application.

Under the agreement each exporting country guarantees to sell a specific quantity of wheat at a specified maximum price, and each importing country agrees to purchase a specific quantity of wheat annually at a specified minimum price (art. III). The total guaranteed sales equal to total guaranteed purchases (art. III, annexes A and B). Provision is made for the increase of guaranteed quantities and for the transfer to other member countries of parts of guaranteed quantities by mutual consent (art. XI). Provision is also made for the increase in purchases in times of critical need (art. XII). The maximum and minimum prices will remain the same for the 3 years during which the agreement is to be renewed (art. VI), namely $2.05 a bushel maximum, and $1.55 a bushel minimum. Prices are fixed in Canadian currency at a fixed parity with the United States dollar, and quality is set in terms of No. 1 Manitoba Northern Canada wheat (art. VI) in bulk in store Fort William/Port Arthur. ing countries endeavor to maintain sufficient stocks of wheat in order to assure supplies to importing countries, and importing countries take precautions to prevent disproportionate purchases of wheat at the opening and closing of crop years (art. VII).

Export

Members which have difficulty in securing their guaranteed sales or purchases may seek the assistance of the Council in obtaining the guaranteed quantities under the agreement (art. V). All transactions over and above those contracted for are unaffected by the agreement:

Certain adjustments are provided so that exporting countries with short crops and importing countries, whose balance of payments and monetary reserves are jeopardized, may have their obligations altered to meet emergency situations. In making such adjustments, the Council adheres to the principle that the country concerned will meet its obligations under the agreement to the maximum extent feasible (art. X).

The agreement provides for an International Wheat Council on which all participating countries are to be represented (art. XIII), which is to be responsible for keeping records necessary for the operation of the agreement, and which will serve as the agency to enforce the rights of the participating countries to sell and purchase wheat under the agreement (art. V). Participating countries are allotted votes in proportion to their share of the total quantity of wheat covered by the agreement (art. XIII).

The Council will be aided in its work by an Executive Committee (art. XIV), an Advisory Committee on Price Equivalents (art. XV), and a Secretariat (art. XVI). Detailed provisions cover financing cooperation with other intergovernmental agencies, and the settlement of disputes and complaints (arts. XVII-XIX).

Ratifications must be deposited by July 15, 1953, by governments responsible for not less than 50 percent of the guaranteed purchases listed in annex A and 50 percent of the guaranteed sales listed in annex B (art. III), or the agreement fails to come into operation (art. XX).

5. QUANTITIES

The 1953 agreement accounts for guaranteed sales by exporting countries of 595 mil

*In the event of the provisions of Article X being invoked by Australia by reason of a short crop, it will be recognized that certain markets, by virtue of their geographical positions, are traditionally dependent upon Australia for the supply of their requirements of wheat grain and wheat-flour. The necessity of meeting these requirements will be one of the factors to be taken into account by the Council in determining the ability of Australia to deliver its guaranteed sales under this Agreement in any crop-year.

After the agreement comes into force adjustments must be made in the event of

nonparticipation or withdrawal of any of the countries included in the agreement in order to bring the total guaranteed sales and guaranteed purchases into balance. On the other hand, increases can take place in the total agreement pool throughout the life of the agreement by increases in the quantities of member countries or accession of additional countries as long as quantities sought by importing countries are covered by increase in the quotas of exporting countries.

The quantity of 595 million included in the new agreement compares with 456 million negotiated in the 1949 agreement, which grew to 581 million in the latter part of the agreement period. The quantity of 270 million included for the United States in the new agreement compares with 168 million bushels originally included for the United States in the 1949 agreement which grew to 253 million in the last years of the agreement.

The quantity of 595 million bushels covered by the new agreement represents about two-thirds of average world exports in the postwar period (1945-46 to 1952-53) of 900 million.

Quantities guaranteed in the agreement include flour which is counted in terms of its wheat equivalent. The part to be supplied in the form of flour is to be determined between the buyer and the seller, subject to decision by the Council in case of disagreement when the matter is considered by the Council under article V on enforcement of rights.

6. PRICES

The prices negotiated in the new agreement represent a considerable change from those included in the 1949 agreement. The maximum in the old agreement of $1.80 for Manitoba No. 1 in store at Fort William/Port Arthur, Canada, has become $2.05 in the new agreement and the minimum in the old agreement ranging from $1.50 in the first year to $1.20 in the fourth has become a uniform $1.55 for the 3 years of the new agreement.

Price equivalents are calculated with relation to the basic prices for the United States coast ranges. Thus the equivalent of the basic grade at the basing point mentioned above would with present transportation rates be $2.28 for U. S. No. 1 Hard Winter wheat at gulf ports.

7. COST OF THE AGREEMENT TO THE UNITED
STATES

In 1949, the Departments of State and Agriculture were asked to estimate the costs in subsidies that were involved in the agreement. At that time the committee was informed that the Department of Agriculture "anticipated that a maximum subsidy of $84 million would be required in the first year of the agreement but that the need for a subsidy will decline or disappear in the latter years."

This figure was reached by applying a 50cent differential per bushel for the total United States quota of 168 million bushels. In the hearings on the present agreement, the United States Secretary of Agriculture testified that the total cost for the 4 years of bridging the gap between the domestic price level and the maximum price of wheat of the 4 years of the agreement will total approximately $570 million for an average export subsidy rate of about 62 cents per bushel. It should be remembered that this substantially larger figure than was anticipated is due in part to an increase in the United States quota from 168 to 253 million bushels.

The increased minimum and maximum prices in the revised agreement promise to make substantial reductions in the amount of subsidy. Secretary Morse testified that—

"With this increase it is estimated that the per bushel cost of the renewed agreement will be reduced from 62 cents per

bushel *. We estimate that for the first year the export subsidy will be about 40 cents per bushel, or a total cost of about $108 million based on the United States tentative quota of 270 million bushels."

In information supplied preliminary to the hearings, the Department of Agriculture explained the matter as follows:

"The maximum IWA price is $2.05 per bushel for Manitoba Northern wheat in store Fort William/Port Arthur. The equivalents for United States wheat are about $2.25 Atlantic, $2.23 gulf, and $2.08 west coast ports, all f. o. b. vessel. To the extent that United States prices at these points exceed the equivalents a subsidy will need to be paid. Also a considerable amount of the exportable surplus of United States wheat does not always obtain the same price in all export markets as does Manitoba Northern because of differences in quality. Taking these points into account and assuming that United States wheat prices will be at about this year's level and that IWA prices for the top classes of wheat will be at the maximum, the estimated subsidy cost is 40 cents per bushel for the first year or about $108 million on a quota of 270 million bushels."

8. HOW THE AGREEMENT WILL BE ADMINISTERED The central organization for carrying out the agreement and serving as a tribunal of last resort is the International Wheat Council, composed of representatives of all the exporting and importing countries. Votes are to be allocated to each country in accordance with the amount of its guaranteed purchases or sales. Importing countries will have a total of 1,000 votes and exporting countries will have a total of 1,000 votes. The United States share, based on guaran

9. PRINCIPAL CHANGES FROM THE 1949
AGREEMENT

The revised and renewed International Wheat Agreement differs from the 1949 agreement in 10 main particulars as follows:

1. The loading period may be extended 1 month before and 1 month after the beginning and the end of the crop year if agreed to by both the importing and the exporting countries concerned and if authorized by the Council.

2. Countries may transfer part of their quota for one or more crop years to another country, subject to Council approval by a majority of the votes cast by the importing countries and a majority of the votes cast by the exporting countries.

3. Accession of new members may be faciliated by reductions of the quantities of the importing countries or by increases in the quantities of exporting countries.

4. Provisions are added to limit the purchases by importing countries to 90 percent of the agreed upon quotas until February 28 of any crop year except by permission of the Council in order to make possible adjustments due to short crops in one of the exporting countries.

5. Sales may be recorded upon the ratification of the agreement by a country if the sales are made prior to the time either the exporting or the importing country ratifies.

6. The escape clauses, by which states may escape from the obligations imposed by the agreement, are tightened by the rewording of article X (Short Crop Imbalances and Payment Safeguard). The Council is instructed in dealing with requests for relief to adhere to the principle that member countries to the maximum extent feasible meet their

8. Before each session of the Council the votes are to be distributed in such a way that exporting and importing countries have equal votes.

9. The Council may call upon an advisory panel, of its own selection, for advice in settling items in dispute in the Council.

10. Numerous adjustments are made in the exporting and importing country quotas. 10. THE FAILURE OF THE UNITED KINGDOM TO SIGN

The committee notes that nonparticipation of the United Kingdom in the agreement will result in a considerable reduction in the total quantity of wheat covered by the agreement; likewise resultant adjustments by reduction of the quantities of the exporting countries, if made on a pro rata basis, will considerably reduce the quota of the United States. The agreement does, however, provide that division of the reduction among the exporters can be on other than a pro rata basis, if supported by two-thirds of the votes cast by the exporting countries and the importing countries counted separately.

The following table shows what would be the result if adjustment were pro rata and alternatively if reductions were made proportionate to the quantities which the exporting countries sold to the United Kingdom under the 1949 agreement. The table is also illustrative in general of possible alternative methods of quota adjustment.

453 of the exporting votes.

Routine administrative decisions will be made by a simple majority vote. More important decisions on matters specifically provided for in the agreement are to be taken by a majority of the votes of importing countries and exporting countries voting separately. Vital decisions can only be taken by a two-thirds vote of the exporting countries and a two-thirds vote of the importing countries. Thus the United States 453 votes will be decisive in the protection of United States interests.

For example, a two-thirds vote is required for amendments, adjustments of quantities to be bought or sold by various countries, reduction of guaranteed purchases to meet critical needs, the delegation of powers or functions of the Council, and the accession of new members.

Sessions of the Council will be held at least once during each half of the crop year. A quorum will consist of a majority of the votes held by both importing and exporting countries taken separately. The permanent seat of the Council will be London unless the Council decides otherwise by a majority of votes of the importing and exporting countries, voting separately.

In order to assist the Council in carrying out its functions the agreement provides for the following: an Executive Committee, an Advisory Committee on Price Equivalents, and a Secretariat. Provision is also made in cases of dispute to seek the advice of an ad hoc advisory panel (art. XIX). The Executive Committee, consisting of representatives of 3 exporting countries and of not more than 8 importing countries, will work under the direction of the Council. The Advisory Committee on Price Equivalents, composed of representatives of 3 exporting countries and of 3 importing countries, will advise the Council and the Executive Committee on technical matters pertaining to prices and price equivalents. The Secretariat, appointed by and responsible to the Council, will perform the necessary staff work.

XCIX- -541

22880

22

"If the United Kingdom fails to take advantage of the privilege of acceding to the agreement or if any of the signatories fails to ratify, article IX provides a mechanism for the redistribution by the Council of guaranteed quantities to balance the total of the guaranteed quantities of exporters with those of importers. This redistribution would be made by a pro rata reduction of the guaranteed quantities of exporters or importers unless the Council should decide otherwise by a vote of two-thirds of the exporters and two-thirds of the importers."

In this connection the committee wishes to call the attention of the Senate to the reservation with which Australia signed the agreement:

"PERCY C SPENDER April 20th, 1953 "Subject to the acceptance however of the reservation that in the event of the nonparticipation in or withdrawal from the Agreement by any one of more of such of the Governments of such importing countries listed in Annex "A" to Article III thereof as

in the opinion of the Government of the Commonwealth of Australia are traditional markets for Australian wheat or in the event of any one or more of such countries reducing its or their respective guaranteed quantities below the quantities shown for them respectively in the said Annex A the Government of the Commonwealth of Australia if it shall have accepted the Agreement may request such reduction to the guaranteed quantity shown in respect of Australia in Annex B to Article III of the said Agreement as may in its opinion be necessary to enable Australia to supply to such importing country or countries the quantities of wheat which Australia would normally expect to supply to it or them as the case may be and may withdraw from the said Agreement if any such request for reduction be not met.

"PCS."

"1. The latest contract involving wheat shipments from U. S. S. R to the U. K. was signed in September 1951. It provided for 800,000 tons of coarse grains and 200,000 tons of wheat. It became effective immediately and shipments were completed in the ensuing year.

"2. Another U. S. S. R.-U. K. contract involving shipment of coarse grains only (150,000 tons of barley, 30,000 tons of oats, and 20,000 tons of corn) was signed early in October 1952. Delivery of the grain against this contract has been completed.

"3. We understand that the Department of State has advised the committee that approaches have been made by the Soviet trade delegation in London to the British Ministry of Food to determine the United Kingdom's interest in buying Soviet grain, including wheat. However, no agreement has yet been concluded and the British Ministry of Food is uncertain concerning the likelihood of the conclusion of such an agreement or its possible terms. The grain trade in the United Kingdom has been returned to private operation but this does not exclude the possibility of a direct contract between the British Ministry of Food and the U. S. S. R. Being free to buy on its own account, the United Kingdom private trade has approached the Russians for offers but as yet has made no purchases."

The following statement was submitted by Assistant Secretary of State Waugh in reply to the subcommittee question:

"We are informed that approaches have been made by the Soviet trade delegation in London to the British Ministry of Food to determine the United Kingdom's interest in buying Soviet grain, including wheat. However, no agreement has yet been concluded and the Ministry is uncertain concerning the likelihood of the conclusion of such an agreement or its possible terms. As previously stated, the British grain trade was recently returned to private operation. However, this apparently does not exclude the possibility of a direct contract between the Ministry of Food and the Soviets. The United Kingdom private trade is now free to buy Soviet grain on its own account, and has approached the Russians for offers, but no private purchases have apparently yet been made.

"We have been assured by the British Ministry of Food that their reasons for not signing wheat agreement are not in any way connected with negotiations for further purchases of Russian wheat. If they were offered the kinds of wheat they needed at attractive prices and for shipment at the

times when wanted, such offers would be given favorable consideration if coming from Russia or anywhere else in the world.

"The Ministry of Food has also informed us that the Soviet trade delegation was told that the Ministry hoped it would not be necessary for the Ministry to make further purchases but to leave this operation to private traders. If the private trade should fail to import sufficient supplies, then the Ministry would have to step in and for this reason it would like to keep in touch with the Soviet trade delegation."

In spite of the difficulties raised by the failure of the United Kingdom to participate, both the Government and private witnesses appearing before the committee urged the Senate to give its advice and consent to the agreement. That is the view of the committee, and its recommendations are made accordingly.

11. IMPLEMENTING LEGISLATION

The International Wheat Agreement required the International Wheat Agreement Act of 1949 (63 Stat. 945) in order to give its terms full application in the United States. The statute authorized the President, acting through the Commodity Credit Corporation, to make available such quantities of wheat and wheat flour as may be necessary to meet the obligations of the United States under the International Wheat Agreement of 1949, and to take certain other action necessary for the implementation of the agreement. The Commodity Credit Corporation under this authority has made available under the agreement wheat acquired under its pricesupport program. The Commodity Credit Corporation has made export payments to commercial exporters for wheat and wheat flour exported to importing countries under the agreement in accordance with the terms and conditions of the export payment program. The rate of payment on such exports reflects the difference between the price of wheat on the domestic market and the price of wheat under the agreement. Those transactions are reported to the International Wheat Council for credit against the quantity of wheat guaranteed by the United States.

Since the agreement here under consideration renews and revises the agreement of 1949 the original implementing legislation will suffice with little modification. The necessary changes may be accomplished by the following resolution, which the committee hereby reports to the Senate for favorable action:

-

"Senate Joint Resolution "Joint resolution to amend the International Wheat Agreement Act of 1949 "Resolved, etc., That section 2 of the International Wheat Agreement Act of 1949 (63 Stat. 945) is amended by inserting before the parenthesis at the end of the first sentence thereof the following: 'and the agreement revising and renewing the International Wheat Agreement for a period ending July 31, 1956, signed by Australia, Canada, France, the United States, and certain wheatimporting countries.'

"SEC. 2. Reference in any law to the International Wheat Agreement of 1949 shall be deemed to include the agreement revising and renewing the International Wheat Agreement."

In his comment on this resolution, dated June 24, 1953, the Secretary of Agriculture, Ezra Benson, stated the following:

"Section 2 of the proposed bill would make the provisions of section 112 (m) of the Economic Cooperation Act of 1948, as amended, applicable to the new agreement. Section 112 of the Economic Cooperation Act of 1948 was continued by section 502 of the Mutual Security Act of 1951 (22 U. S. C. 1653). Section 112 (m) exempts from the pricing provisions of section 112 (e) of that act (which requires Commodity Credit Corporation to charge cost or domestic market price, whichever is lower, on all surplus commodities

held by the Corporation in its price-support stocks which are procured from the Corporation with foreign assistance funds and where the transfer to the recipient country is by grant) and section 4 of the act of July 16, 1943 (57 Stat. 566) (which requires Commodity Credit Corporation to be fully reimbursed for all commodities procured to supply the needs of other Government agencies) wheat and wheat flour supplied to countries which are parties to the International Wheat Agreement of 1949 and credited to their guaranteed purchases thereunder. Under this exemption Commodity Credit Corporation is authorized to assume the difference between the agreement prices at which the wheat would move, and market prices or Commodity Credit Corporation costs at which it was procured. It should be noted, however, that the exemption granted by section 112 (m) has not been available during the fiscal year 1953 by reason of the so-called Whitten amendment contained in the Mutual Security Appropriation Act, 1953 (66 Stat. 655), which requires the payment to Commodity Credit Corporation of support and price, including handling storage charges where commodities are purchased from Commodity Credit Corporation with funds appropriated for economic assistance by that act."

It is the understanding of the committee that the full current domestic price is to be paid in procurement from Commodity Credit Corporation, when it is higher than the support price plus costs. Likewise, commodities included in aid programs which are procured from the private trade, must, under the Whitten amendment, be procured at the full domestic price.

12. THE UNDERLYING JUSTIFICATION

The International Wheat Agreement is not designed to benefit one country or a group of countries alone but exists because it provides a more stable and orderly world market condition than would be the case without the contract. The obligations and rights of the importing countries are balanced by the obligations and rights of the exporting coun

It is significant that every delegation with one exception that participated in the negotiations signed the agreement, and there is some expectation that the one exception, Great Britain, may accede in the near future.

There was a general agreement among United States representatives and private interests concerned with the renewal of the agreement on five basic points:

1. The fundamental principles on which the International Wheat Agreement is built are sound, and the experience of the past four years fully justifies the renewing and revising of the agreement of 1949.

2. The International Wheat Agreement effectively implements both the domestic and foreign policies of the United States.

3. The operations of the International Wheat Agreement of 1949 demonstrate that the agreement is workable and desirable, from a practical point of view.

4. There should be a substantial increase in the basic maximum and minimum prices of the 1949 agreement.

5. The quotas of individual countries should be readjusted so as to eliminate certain competitive disadvantages to flour exporters which were revealed under the administration of the agreement of 1949.

The committee is convinced that these objectives have been embodied in the new agreement and that they are consistent with United States interests. The committee further notes that although Britain may persist in staying outside the agreement, nevertheless, it is in the interest of the United States to ratify. Accordingly, the committee recommends that the Senate give its advice and consent to ratification so that the President may ratify by July 15. The committee further recommends that the Senate promptly pass the implementing legislation, namely, the committee's joint reso.